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Of the 60 equity NFOs launched in the last one year ending in April 2024, 39 NFOs are based on sectors/themes.
Among sectoral/thematic NFOs, fund houses launched 5 NFOs focusing on innovation in the last one year. These funds are ICICI Prudential Innovation Fund, Nippon India Innovation Fund, Baroda BNP Paribas Innovation Fund, Bandhan Innovation Fund and UTI Innovation Fund.
At least 3 NFOs were launched in each of these themes - banking and financials, manufacturing, consumption, technology and business cycle.
Cafemutual spoke to MF industry experts to understand what makes these themes popular among AMCs and what the investors can expect from these sectors.
Anish Tawakley, CO - CIO Equity, ICICI Prudential MF said that in any industry, the market-share gainers are the companies which are innovating. He said, “If one invests in these companies at the right time, at a reasonable valuation, then the wealth creation can be significant. One of the sectors where innovation is the mainstay is healthcare – be it for increasing accessibility, diagnoses or treatments. The treatments that are available today are far more advanced than the treatments available earlier. Even when it comes to pharma, the non-generic aspect is innovation driven. So, there is remarkable innovation in every step of the way in certain industries.”
Seconding his views, Vishal Kapoor, CEO, Bandhan MF said, “I think that innovation has consistently driven companies forward, and today, India's flourishing innovation landscape presents an exciting investment opportunity. There are ground-breaking transformations not only in technology but also in sectors like finance, auto, technology, healthcare, entertainment, retail, etc. With India's climb in the global innovation rankings and swift advancements in fields like digital media, e-commerce and electric vehicles, innovation funds are crafted to capitalize on these pivotal shifts.”
On manufacturing, B. Gopkumar, CEO, Axis MF feels that the ruling government’s focus on manufacturing can benefit the sector. He said, “There has been a lot of emphasis of the ruling government on the manufacturing sector which makes it very lucrative sector to invest in. Also, government schemes like Make in India and PLI schemes have further made it popular. Secondly, the manufacturing index is quite broad-based which further reduces the risk and make it suitable for investors to invest.”
Mumbai MFD Sadashiv Phene feels that business cycle funds will do well in the days to come. He said that business cycle funds give exposure to multiple sectors and offer more diversified portfolios compared to other thematic funds.
Varun Gupta, CEO, Groww MF feels that financial services are closely coupled with the Indian economy and even in developed geographies such as US or China, banking assets have been closely linked with GDP.
He said, “In India, historically bank assets have grown faster than the GDP. Given the positive medium to long term GDP growth projections of India, the next decade holds potential for the financial services sector. Also, stock prices of this sector have undergone a correction and therefore valuations are lower as compared to their historical averages making it a preferred category.”
Here is the list of the NFOs launched between April 2023 and April 2024.
Innovation fund
Banking and Financials fund
Manufacturing fund
Consumption fund
Technology fund
Business cycle fund
Healthcare fund
Pharma and healthcare fund
Life transportation logistics fund
Energy opportunities fund
Defence fund
Financial services fund
Commodities fund
PSU fund
Momentum fund
Teck fund
Innovation & opportunities fund
Quant fund
Non-cyclical consumer fund
Active momentum fund
BFSI fund
